Bristol-Myers, Celgene CEOs trot out detailed case for $74B megadeal

Bristol-Myers Squibb and Celgene sent 2019's first big shockwave throughout pharma with last week's $74 billion megamerger announcement. And they immediately touched off questions about the deal: Analysts called it too expensive, not to mention risky on the patent side and pipeline, too.

But even as market watchers continued to offer up their reservations on Monday, executives took to the J.P. Morgan Healthcare Conference to fire back with their own detailed case for the deal.

At a fireside chat Monday, Bristol-Myers CEO Giovanni Caforio said the tie-up will create the leading immuno-oncology player in solid tumors and hematology, plus a top five player in immunology and inflammation. He said he’s excited about the "doubling" of Bristol-Myers’ pipeline: The combined drugmaker would have 10 phase 3 programs, six near-term potential launches and a broad early-stage pipeline, according to the presentation.

On top on his list of priorities after the deal is "accelerating the preparation" for those six launches, Caforio said. BMS has an industry-leading access and reimbursement organization, the CEO argued, especially in the U.S., and he cited Eliquis and Opdivo launches as evidence that BMS can pull off some super-successful rollouts. The company can leverage those Celgene market debuts into a total of $15 billion in peak sales to the combined company, Caforio said.

"The deal is really about the science and innovation," he told an audience at Westin St. Francis' Grand Ballroom. "And of course, cost synergies are important." He said he's "very confident" BMS will be able to deliver on the $2.5 billion cost-savings target.

For his part, Celgene CEO Mark Alles said the deal will create a "preeminent global biopharmaceutical company" that’s a leader in cancer and a "scientific powerhouse."

J.P. Morgan analysts questioned the executives about uncertainty around Revlimid’s patent loss—echoing last week's concerns that, even at $15 billion, the new meds might not make up for an earlier-than-expected generic—but Caforio countered, saying the tie-up would create a strong company even without the multiple myeloma blockbuster.

Despite what the management says, Bernstein analyst Ronny Gal published some of his own thoughts on the merger Monday after speaking with investors. He said simply by doing the deal, the "two companies are communicating lack of confidence in their own position." He mentioned BMS’ big Checkmate-227 trial and IP challenges for Revlimid as uncertainties for each drugmaker.

Ahead of the presentation, Celgene said it met its 2018 guidance of $15.2 billion in total revenues and issued new guidance for 2019. This year, Celgene expects $17 billion to $17.2 billion in total revenues, which would represent a 12% increase at the midpoint. In 2020, the company expects sales of $19 billion to $20 billion.

Looking forward, the company expects FDA approval for Revlimid in combo with Roche’s Rituxan to treat relapsed/refractory indolent lymphoma, plus approval for Otezla in Behҫet’s disease, according to the Monday update. It’s also exploring Revlimid in other uses and plans to submit an application in the second quarter for Otezla to treat moderate to severe scalp psoriasis.

Also in Celgene’s pipeline is ozanimod to treat relapsing multiple sclerosis; the company expects to file for approval in the U.S. and Europe this quarter.